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acquaintance, Ms. Yudain, who was an insurance broker who told
him that his concerns might have substance.
Both Mr. Johnson and Mr. Corde testified that they met in
1982 and had some discussion regarding the possibility that
petitioner's EVC activities might run afoul of State insurance
regulations. After Mr. Johnson met with Mr. Corde in 1982, Mr.
Corde sent Mr. Johnson a report on September 7, 1982, discussing
the feasibility of creating a subsidiary to reinsure declared
value risks. The report stated:
It is our understanding that * * * [petitioner]
currently provides its customers with coverage for any
parcels lost or damaged up to $100. Those parcels with
values in excess of $100 can be declared by the shipper
and protection secured at a cost of $.25 per $100 of
value. While this protection is not considered to be
insurance, it could be converted to insurance and that
insurance could be provided by a * * * [petitioner]
owned insurance company.
The report contains figures regarding petitioner's EVC revenues,
claims, and gross profits and discusses the potential for
increasing profits. The report does not discuss problems with
State insurance laws.
Mr. Johnson's conversation with Mr. Corde in 1982 appears to
be his and petitioner's last inquiry regarding problems with
State insurance regulation. Neither Mr. Johnson nor petitioner
sought legal advice regarding these alleged concerns. In
addition, neither Mr. Johnson nor anyone else on petitioner's
staff appears to have made an inquiry as to whether the EVC
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